Editor Charles H. Smith's Note: A pamphlet ("Tract No.
XVI") published by the Land Nationalisation Society, probably in mid-1886.
Original pagination indicated within double brackets. To link directly
to this page, connect with: http://people.wku.edu/charles.smith/wallace/S391.htm

[[p.
1]] Since the Land Nationalisation Society issued its programme
and my book was published, I have found that there is a very wide-spread
objection to the method of compensating landlords by means of any form
of terminable annuities. There is, in this country, a strong feeling that
a form of property which has been always recognized as the most stable
and secure, and as that which is most calculated to produce a permanent
and often an increasing income, should be paid for at its full value if
taken by the State for the benefit of the community. Any other mode of
payment is held to be distinctly unjust, and will certainly excite very
strong opposition by large bodies of people who would not otherwise object
to Land Nationalisation. If, therefore, this objection can be obviated
without in any way sacrificing the public interest, it will evidently
be good policy to do so, as our views will thereby be more quickly and
more certainly brought within the domain of practical politics.

It is therefore suggested that, in exchange for
his land, each landlord shall receive bonds bearing interest at 3 per
cent., and producing, together with the amount paid by the tenant for
the purchase of the improvements, a revenue equal to the net average income
he has hitherto obtained from his land. These land bonds should be redeemable
at par value after a fixed term of years.

Recent discussions have shown that this is a
practical proposal. It is often supposed that if the land is thus bought,
the State risks a heavy loss in case of any further fall in value, or
even in the absence of a rise from possible failure of tenants to pay
the rent; but it can be shown that an ample margin will be secured sufficient
to cover all such risks, while the absolutely certain rise in land values
with increasing population affords the means of redeeming the bonds given
in payment, and thus securing in a comparatively short time, the whole
land revenues of the country, which will then replace all other taxation.
On both these points some explanation is required.

In Mr. Gladstone's proposed scheme for buying
out the Irish landlords, the principle was laid down, and never controverted,
that the landlords were entitled to compensation for the net[[p. 2]]incomes they derived from
the land, and that the amount of government land bonds given them in payment,
at 20 or 25 years' purchase, was to be estimated on this net income,
not on the judicial rental payable by the tenants. The difference
between these consists of costs of agency, law expenses, and bad debts,
and is estimated at from 20 to 30 per cent. of the judicial rents. It
was this large margin which enabled Mr. Gladstone to offer the tenants
the means of purchasing their farms by means of terminable rentals
actually lower than the present judicial rents, which should yet leave
a considerable surplus after paying the interest on the landlord's bonds,
by means of which these bonds might be extinguished before the terminable
rentals came to an end. The same principle is applicable in Great Britain,
for the recent reports of the Agricultural Commission show that large
English Estates cost from 15 to 30 per cent. for management, while as
much more is often laid out for improvements. The net revenue will therefore
be, in every case, very much below the gross rental of the farms.

But according to our proposals, all these costs
of management will be saved when the State takes the lands, because we
insist that the tenants must always become the owners of the buildings,
fences, roads, drains, &c.,--all in fact which can be destroyed, removed,
or deteriorated, while he remains a tenant of the State for the bare land.
This bare unimproved land will want no "management;" the tenant will be
left perfectly free to do what he likes with it, so long as he pays the
rent punctually into the proper office; and he will be sure to do this
because, if he fails, he will be liable to ejectment, and to have the
house and improvements, which are his own property, sold. The improvements
will therefore be a security for the payment of the rent, just as the
house and premises in a town are a security for the payment of the ground
rent. It is thus clear that, even in the case of agricultural land, the
State could safely pay the landlord a fair price for his bare land (the
tenant paying the landlord for any improvements made by him) and could
still with the surplus rent received from the tenant, redeem a number
of the land bonds every year. Taking the difference between the fair rental
payable by the tenant and the net rental received by the landlord at 20
per cent., this difference will serve to pay off the whole purchase-money
in 56 years, even if there is no increase whatever in the value of the
land. But as large quantities of agricultural land are required every
year for extensions of towns and villages, for manufacturing purposes,
and for market gardens, the much higher rents obtained for this portion
of the land will render the transaction a still more secure one, and the
period of repayment shorter.

[[p. 3]] With regard
to town and building lands the conditions are much more advantageous,
because they show a continuous rise in value, even in times of depression,
owing to increase of population. It is calculated that this increase for
the last 40 years has been at the average rate of 2 per cent. per annum
for all the land of the kingdom, agricultural and urban, and as we have
allowed for no increase in the value of agricultural land, we may fairly
take the increase of the urban land at 3 per cent. But an increase of
only 2 per cent. per annum will suffice to pay off the whole of the ground-rents
in 40 years, while if the increase were 3 per cent. the repayment would
be effected in a much shorter period.

When this was done, the whole of the revenues
derived from the land of the country would be available in lieu of taxation,
and would probably suffice for all the legitimate purposes of the community,
both imperial and local; but there is no reason why this great boon should
be reserved for our successors alone. The fair plan would be to devote
one half of the surplus rents to relief of taxation, the other half to
repayment of purchase-money by extinguishing a portion of the land bonds.
This plan would have the double advantage of immediately reducing taxation,
and of effecting this by moderate steps annually, so as not to cause too
great a disturbance to trade. It may be surely anticipated that, the relief
thus afforded to industry, together with the increased production of wealth
arising from the free access to land afforded to all labourers, would
so greatly increase the general prosperity of the country that the repayment
of the bonds would go on even quicker than has been estimated from the
increase of land-values during past years.

It is, I think, quite clear that by the plan
now suggested, we should obtain all the advantages which we desire:--in
the first place, immediate possession of the land, then an immediate and
progressive reduction of taxation, culminating finally in the substitution
of one general tax on ground-rent values in place of all other taxation.
This can be done even though we pay landlords the full value of their
land in good marketable securities liable to progressive redemption at
par value. This method is more simple and intelligible than that of terminable
annuities; it obviates all objections of unfairness; and it provides a
good security on which all mortgages and other charges would have a lien
instead of on the land. We may fairly anticipate that with such a method
of fair and full compensation, the time of accomplishment of Land Nationalisation
would be hastened one half, and this is surely of far more vital importance
than the distant realisation of any ideas of abstract justice. A generous
[[p. 4]] liberality will, in this case, as
in so many others, prove to be in the result the truest economy.

Those earnest land-reformers who object to any
payment whatever for the land which they claim as the people's right,
will no doubt accuse us of sacrificing principle to expediency. We can
hardly hope to convince them, but we maintain that our method is not only
expedient, but in the highest sense, just. It is just, because it is calculated
to obtain all that can be obtained by the most violent and aggressive
measures, and at a far earlier date. It is just, because, while obtaining
at once the use of the land, and by a gradual process the whole
of the revenues from it, no single individual will feel himself
robbed, no one will be reduced from affluence to poverty, and consequently,
none of those angry passions will be aroused and none of that wide-spread
misery will be produced, which would be the certain effect of any large
measure of taxation or other form of confiscation. Our plan is essentially
one calculated to bring about the greatest happiness of the greatest number.
It recognises the moral rights of existing landowners under a system which
they did not create, and which has received the sanction of all civilised
governments. It is a method which will be productive of the maximum of
good with the minimum of injury to individuals; and it thus claims to
embody the highest form of equity attainable under the circumstances of
the case. We therefore trust that it will commend itself in principle
to all who wish to bring about a great reform by peaceful, just, and practical
means.